Urenco to complete New Mexico expansion by year-end

21 August 2015

Urenco said yesterday that it is "on track" to complete a major capacity expansion at its Urenco USA site in New Mexico by the end of this year. The uranium enrichment and nuclear fuel cycle services provider has said it is expanding capacity there to 4700 tonnes-separative work units (SWU) per year.

The group invested €280.6 million ($309.5 million) in the first half of 2015 in the new enrichment facility in the USA and at its tails management facility in the UK. It said in March that it had pushed back the expected start date of the Capenhurst Tails Management Facility (TMF) deconversion plant to 2017.

Announcing the group's financial results, chief executive officer Helmut Engelbrecht said Urenco's new project management team had carried out a comprehensive review of the TMF construction project and concluded that the facility will incur higher construction costs. The 2017 date reflects the group's expectation that commissioning of the plant will occur "when capital expenditure on the asset will be largely complete".

The company said net income rose to €166 million ($187 million) in the first six months of the year, ending 30 June, up from a profit of €106.4 million ($120 million) in the same period last year. First-half revenues came to €586.6 million ($662 million), a 12.1% year-on-year increase. This reflected higher volumes and higher average unit revenues for both SWU and uranium, which were driven by favourable foreign exchange movements, Urenco said. The phasing of revenue between the first and second half of 2015 is "expected to show seasonality similar to that experienced in prior years", it added.

"Urenco has delivered a strong operational performance in the first half of 2015. However, we continue to experience challenging conditions in the global nuclear fuel market," Engelbrecht said. "We recognise the long-term nature of the nuclear market. We will continue to develop, innovate and drive efficiency in order to maximise our market opportunities and serve the nuclear industry as a reliable and long-term partner."

Looking ahead, the group said that "continued pricing pressures are anticipated, alongside a relative slowdown of the nuclear fuel market and increased worldwide inventories in the coming years."

It noted that this month Japan restarted the first of its nuclear reactors, but added that "uncertainty remains" as to when the country's other reactors will be brought back online.

"However, Urenco recognises that the nuclear industry is a long term business and will continue to provide its customers with the best possible service delivery and the highest level of quality and expertise. The nuclear sector is expected to grow in the future and Urenco is well positioned to help customers meet their requirements for a secure supply of enrichment services," it said.

The group's order book extends to 2030 with a value of about €17 billion ($19 billion) - based on €/$1.11 (31 December 2014: €16 billion based on €/$1.30).

Discussions between shareholders and governments continue with respect to the future ownership of the company, it said.

German utilities EOn and RWE jointly own a one-third stake in Urenco on behalf of the German government, while Britain and the Netherlands also hold a third each. News agency Reuters reported on 12 August that EOn chief executive officer Johannes Teyssen had said he was confident the company could sell its stake in Urenco, but the enrichment company's complex ownership structure means it is impossible to say when a sale would take place. Teyssen also said the Dutch government's recent decision to sell its stake had been a significant step in the process.

Both Engelbrecht and John Hood, chairman of the Urenco board, have announced their intention to retire. They will continue in their positions until successors have been appointed to ensure a smooth transition, Urenco said.